President Obama put all his cards on the table yesterday.
He made his big
announcement on his response to our current
fiscal crisis and festering national debt.
He wants to raise taxes (Quelle surprise!) and will not
touch any entitlement program to reduce uncontrollable
spending.
He has got to be kidding, right? Wrong. The President is
hunkering down, pushing for a raft of new taxes, passing off more
cuts in discretionary spending (necessary but hardly sufficient)
and going into campaign mode for the 2012 re-election
campaign.
Americans for Tax Reform, beating to quarters,
excoriates
the President for combining the worst of his 2012 tax
increases and those also proposed by the Simpson-Bowles commission
and the Gang of Six, the bipartisan group of U.S. Senators who are
supposedly working on a proposal of their own.
According to ATR, the Obama plan would raise the tax
revenue from 18-19 percent of the economy, the historic average, to
21 percent. Of course, this 21 percent is on top of state and local
taxes which cumulatively burden workers and their
families.
In addition, the President would raise taxes, oh, $1-3
trillion over the next decade. He also de-accelerates from the GOP
plan put together by Budget Chairman Paul Ryan. He, Obama,
supposedly cuts $4 trillion over 12 years versus 10 years as
proposed by Ryan while raising taxes substantially.
There will also be tax hike “triggers,” an increase in
taxes on capital gains and dividends from 15 percent to 23.8
percent and a boost in the death tax rate from 35 to 45 percent
with a corresponding cut in the exemption from $10 million to $3.5
million. All this is on top of the 20 new or higher taxes that came
along with Obamacare.
Besides ignoring the original Simpson-Bowles commission he
established, the President now calls for another commission, a
congressional one, under the leadership of Vice President Biden.
This is beginning to sound like the fiscal equivalent of the
Groundhog
Day (1993), without the happy
ending.
But the most egregious thing about the President’s plan is
his complete abandonment of any kind of reform or cuts or overhaul
of entitlement programs such as Medicare or Medicaid.
There are no serious policy analysts on the face of the
globe who think America — or any other developed country for that
matter — can escape the inexorable demographic trends that are
driving these programs into bankruptcy. None. All see entitlement
reform as a fiscal if not moral imperative. The status quo is
unsustainable.
One might harbor the dream, nightmare really, of raising
taxes sufficiently to cover these entitlement bulges, but that is a
fantasy. One must assume that the President and his advisors are
smarter than that. The President is taking a pass, pending his
re-election campaign, without facing up to the hard choices
confronting him and the nation. This is simply tragic.
But predictable. To use the current formulation,
politicians of both parties have kicked this can down the road for
years, which is why House Speaker John Boehner, Chairman Ryan, and,
to their credit, the Tea Party caucus stand out in terms of their
political courage and commitment to future generations of young
Americans.
The Republicans face a titanic challenge to educate the
citizenry on the fundamentals of our government finances and
outline the hard choices that cannot be ignored. As former Fed
Chairman Alan Greenspan has
said, “We’ve got to resolve this issue
before it gets forced upon us.”
“The only question is, is it before or after a bond market
crisis? Because there’s no alternative.”
